The fund aims for growth by investing in equities in Africa and in companies elsewhere with their main business in the region. The portfolio will be diversified across countries and sectors, enabling the fund to benefit from rising demand for the region’s natural resources and a growing consumer market underpinned by the emergence of a new middle class.
Franklin Templeton believes Africa is expected to grow more than 7 per cent a year over the next 20 years. The firm launched its first emerging markets mutual fund in 1987 and its emerging markets group has been investing in Africa since 1990. It manages over $256m in African equities across its emerging markets portfolios.
The lead portfolio manager is Templeton emerging markets group executive chairman Dr. Mark Mobius. Mobius has spent more than 40 years working in emerging markets and joined Franklin Templeton in 1987.
He says Africa has impressive stores of resources, in agriculture as well as minerals, and that African economies are likely to benefit from investment in infrastructure projects such as roads, bridges, schools and hospitals. Mobius feels this helps to the risks of investing in Africa and believes that some of the characteristics observed in economies such as China and India decades ago are present in a number of African economies.
This fund gives UK retail investors access to fast growing African economies, with an experienced fund manager and a sterling share class. However, these markets are also higher risk because they tend to be relatively small, potentially volatile and illiquid. Political instability is also a possibility in some regions, but things are improving in many regions.